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Planar Announces Fiscal Third Quarter 2009 Financial Results
Posted by: gurufocus (IP Logged)
Date: August 4, 2009 05:10PM
Press Release: Planar Announces Fiscal Third Quarter 2009 Financial Results
BEAVERTON, Ore.--(BUSINESS WIRE)--Planar Systems, Inc. (NASDAQ:PLNR), a worldwide leader in specialty display solutions, recorded sales of $44.1 million and GAAP loss per share of $0.07 in the third quarter ended June 26, 2009. On a Non-GAAP basis (see reconciliation table), income per share was $0.04 in the third quarter of fiscal 2009.
“I am pleased with our sequential sales growth and return to Non-GAAP profitability in the third quarter, especially considering the continued general weakness in the global economic environment,” said Gerry Perkel, Planar’s President and Chief Executive Officer. “We have begun to see improved order funnels and deal opportunities in our Industrial business compared to earlier this fiscal year, which is an encouraging sign. In addition, our continued focus on strengthening the balance sheet and improving business profitability has yielded solid results as we generated cash from both working capital and operations during the third quarter.”
SUMMARY OF KEY FINANCIAL METRICS
The following information summarizes some key financial measures for the Company at the end of the third quarter of fiscal 2009:
SUMMARY OF FISCAL THIRD QUARTER 2009 BUSINESS SEGMENT FINANCIAL PERFORMANCE
The following table presents a breakdown of the Company’s Non-GAAP financial performance by major business unit for the third quarter of fiscal 2009. Additional comparative segment financial information, along with reconciliations to GAAP and information regarding the use of Non-GAAP financial measures, are presented in supplementary tables and notes included with this release.
SUMMARY OF THIRD QUARTER RESULTS
Sales in the Company’s Industrial Business Unit (IBU) increased 24 percent to $13.5 million in the third quarter compared to the second quarter in fiscal 2009. The Industrial segment experienced renewed demand for customized digital display solutions compared to earlier this fiscal year. Orders were especially strong related to certain specific specialty retail display applications. In addition to a robust sequential sales increase, the IBU also had a strong design win quarter, successfully landing a number of new design wins which offer the opportunity to deliver up to approximately $7 million in revenue over the next 18 to 24 months. These wins included customized solutions for outdoor digital signage applications, special ruggedized and hardened displays, a new EL application in a radio communication system as well as displays to support new versions of the now popular DVD rental Kiosks. Additionally the IBU is working on new opportunities for its transparent EL display technology. Based in part on these new design wins and new opportunities, the Company expects year-over-year revenue growth in the Industrial segment in fiscal 2010.
Sales in the Commercial Business Unit (CBU) increased 28 percent sequentially, and included a favorable mix of higher margin touch and other monitors vs. pure commercial grade displays. In addition, unique conditions were favorable to overall CBU gross profit for the third quarter as the Company was able to sell certain inventory prior to increases in industry-wide product costs. The Commercial segment continues to be focused on opportunities to offer and sell higher margin products in its portfolio and contribute positive earnings and return on invested capital to the Company.
Sales for the Control Room & Signage Business Unit (CSBU) increased 35 percent compared to the second quarter of 2009 due to the stronger seasonal trend combined with improved demand in the government and utilities sectors for rear projection “video wall” installations. In addition, the CSBU announced a new category of LCD based “Clarity Matrix” video wall displays that leverage the very latest in super narrow bezel LCD technology, a unique mounting system, centralized outboard electronics and simplified configuration and management software. The Company’s plan is for this new technology to open up additional opportunities for Video Walls where rear projection technology may not fully satisfy the specific application.
Sales for the Home Theater Business Unit (HTBU) declined 12 percent compared to the second quarter of 2009 as demand for high-end home theater equipment continued to be negatively impacted by the slumping luxury home construction and remodeling markets. The Company is continuing to review and act on opportunities to improve the financial performance of this unit in the future, both through further cost reductions, and through commencing the offering of a number of new, higher margin products under the “Runco” brand.
Overall Company gross margins were approximately 29 percent in the third quarter, driven by a favorable mix of higher margin products in most of the Company’s business units, some unique market conditions in the Commercial business and the impact of continued company-wide actions to enhance operational efficiencies and implement cost reductions. Sales and Marketing, R&D, as well as General and Administrative expenses have been reduced significantly compared to the previous year, and should continue to decline into fiscal 2010 as the Company’s expected restructuring activities are fully implemented. Finally, the Company’s consolidated Non-GAAP effective tax rate has been reduced to approximately 10 percent for the third and fourth quarter of fiscal 2009. This lowered Non-GAAP effective tax rate should remain at similar levels in fiscal 2010.
While the Company believes its markets are still being negatively impacted by the global economic situation, the Company is beginning to see renewed order activity in the Industrial business and experienced sequential sales growth in all of its businesses during the third quarter with the exception of the Home Theater Unit. Overall Company financial results were improved in the third quarter and the Company believes additional opportunities to increase cash and profitability exist. In addition, the Company remains committed to its strategy of supporting the Business Units that are achieving their financial goals and aggressively working to improve or divest the segments that are unable to contribute positively to the Company’s financial performance.
Looking forward, the Company currently believes it will experience similar levels of revenue in the fourth quarter compared to the third quarter of 2009 which should result in positive Non-GAAP earnings and EBITDA for the fourth quarter. In addition, the Company believes that sales, Non-GAAP profitability and EBITDA will improve for the full year of fiscal 2010 compared to fiscal 2009, with a similar pattern to fiscal 2009 in terms of the expectation for higher revenues and profits in the second half of the fiscal year than in the first half.
Results of operations and the business outlook will be discussed in a conference call today, August 4, 2009, beginning at 2:00 PM Pacific Time. The call can be heard via the Internet through a link on Planar’s Web site, www.planar.com, or through numerous other investor sites, and will be available for replay until September 4, 2009. The Company intends to post on its Web site a transcript of the prepared management commentary from the conference call shortly after the conclusion of the call.
Planar Systems, Inc (NASDAQ:PLNR) is a global leader of specialty display technology providing solutions for the world’s most demanding environments. Hospitals, space and military programs, utility and transportation hubs, shopping centers, banks, government agencies, businesses, and home theater enthusiasts all depend on Planar to provide superior performance when image experience is of the highest importance. Founded in 1983, Planar is headquartered in Oregon, USA, with offices, manufacturing partners, and customers worldwide. For more information, visit www.planar.com.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 relating to Planar’s business operations and prospects, including statements relating to expectations of future orders and revenue from recent design wins and year-over-year revenue growth in the Industrial segment, actions taken to improve future financial performance, Sales and Marketing, R&D and General and Administrative expense levels for fiscal year 2010, the expected non-GAAP effective tax rate for fiscal year 2010 and the statements made under the heading “Business Outlook.” These statements are made pursuant to the safe harbor provisions of the federal securities laws. These and other forward-looking statements, which may be identified by the inclusion of words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “goal” and variations of such words and other similar expressions, are based on current expectations, estimates, assumptions and projections that are subject to change, and actual results may differ materially from the forward-looking statements. These statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. Many factors, including the following, could cause actual results to differ materially from the forward-looking statements: poor or further weakened domestic and international business and economic conditions; changes or continued reductions in the demand for products in the various display markets served by the Company; further inability to realize expected benefits and synergies of the Clarity and Runco acquisitions; any delay in the timing of customer orders or the Company’s ability to ship product upon receipt of a customer order; any inability to reduce costs quickly enough in response to unanticipated reductions in revenue; adverse impacts on the Company or its operations relating to or arising from Company indebtedness and difficulties in obtaining necessary financing, changes in the flat-panel monitor industry; changes in customer demand or ordering patterns; the Company’s inability to complete intended dispositions of underperforming or non-strategic assets; changes in the competitive environment including pricing pressures or technological changes; technological advances; shortages of manufacturing capacity from the Company’s third-party manufacturing partners; final settlement of various contractual liabilities; future production variables impacting excess inventory and other risk factors listed from time to time in the Company’s periodic filings with the Securities and Exchange Commission (SEC). The forward-looking statements contained in this press release speak only as of the date on which they are made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this press release.
Note Regarding the Use of Non-GAAP Financial Measures:
In addition to disclosing financial results calculated in accordance with U.S. generally accepted accounting principles (GAAP), the Company\'s earnings release contains Non-GAAP financial measures that exclude the income statement effects of the acquisitions of Clarity Visual Systems and Runco International, share-based compensation and the requirements of SFAS No. 123R, "Share-based Payment" ("123R"). The Non-GAAP financial measures also exclude impairment and restructuring charges, the amortization of intangible assets related to previous acquisitions, various tax charges including the valuation allowance against deferred tax assets and, new this quarter, excludes the gain or loss on foreign currency due to the non-cash nature of the charge. The earnings release also contains a calculation of Non-GAAP earnings before interest, taxes, depreciation, and amortization (Non-GAAP EBITDA), which, in addition to excluding the effects of the Clarity and Runco acquisitions, share based compensation, and other adjustments, includes an allocation of Corporate expenses to the Company’s business segments in order to calculate Non-GAAP EBITDA by business segment. Such corporate expenses include Corporate General and Administrative (primarily), Research and Development, and Sales and Marketing which are not specifically identified as related to each business segment in the information provided to the Chief Operating Decision Maker, rather are estimated for the purpose of presenting fully burdened lines of business. The Non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The Non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.